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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Check the appropriate box:
[ ] Preliminary Proxy Statement.
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RULE 14a-6(e)(2)).
[X] Definitive Proxy Statement.
[ ] Definitive Additional Materials.
[ ] Soliciting Material Pursuant to Section 240.14a-12
MGE Energy, Inc.
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(Name of Registrant as Specified In Its Charter)
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
OF MGE ENERGY, INC.
DATE: Tuesday, May 20, 2003
TIME: 11:00 a.m., local time
PLACE: Marriott Madison West
1313 John Q. Hammons Drive
Middleton, Wisconsin
PURPOSE:
- To elect three Class II directors to terms of office expiring at the 2006
Annual Meeting of Shareholders; and
- To transact such other business as may properly come before the meeting.
Shareholders of record at the close of business on March 14, 2003, are
entitled to vote at the meeting.
The matters to be acted upon at the meeting are described in the
accompanying proxy statement.
By order of the Board of Directors
/s/ TERRY A. HANSON
TERRY A. HANSON
Vice President, Chief Financial
Officer and Secretary
April 11, 2003
TABLE OF CONTENTS
PAGE
----
QUESTIONS AND ANSWERS....................................... 1
VOTING...................................................... 2
Number of Votes Per Share................................. 2
How Street Name Holders May Vote.......................... 2
How Record Holders May Vote............................... 2
Holders Needed to Establish a Quorum...................... 2
The Vote Necessary for Action to be Taken................. 3
Revocation of Proxies..................................... 3
Electronic Access to Proxy Materials and Annual Report.... 3
ELECTION OF DIRECTORS....................................... 4
Beneficial Ownership of Common Stock...................... 5
Section 16(a) Beneficial Ownership Reporting Compliance... 6
Meetings and Committees of the Board of Directors......... 6
Audit Committee Report.................................... 7
Director Compensation..................................... 8
Executive Compensation.................................... 8
Report on Executive Compensation.......................... 9
Company Performance....................................... 11
Pension Plan and Supplemental Retirement Plan............. 12
Deferred Compensation Plan................................ 13
Severance Plans........................................... 14
OTHER INFORMATION........................................... 14
Expenses of Solicitation.................................. 14
Shareholder Proposals for 2004 Annual Meeting............. 14
Independent Accountants................................... 15
TRANSACTION OF OTHER BUSINESS............................... 15
EXHIBIT A: AUDIT COMMITTEE -- CHARTER....................... A-1
QUESTIONS AND ANSWERS
Q: WHEN AND WHERE WILL THE ANNUAL MEETING TAKE PLACE?
A: The meeting will be held on Tuesday, May 20, 2003, at 11:00 a.m., local
time, at the Marriott Madison West, 1313 John Q. Hammons Drive, Middleton,
Wisconsin.
Q: DO I NEED A TICKET TO ATTEND THE MEETING?
A: No; however, if you plan to attend the meeting, please fill out the enclosed
reservation form and return it with your proxy card so we may have an
indication of the number of shareholders planning to attend the meeting. If
your shares are held through a broker or its nominee and you would like to
attend the meeting, please see "Voting -- How Street Name Holders May Vote"
on page 2.
Q: WHY AM I RECEIVING THIS PROXY STATEMENT?
A: We are sending this document to you because our Board of Directors is
seeking your proxy to vote your shares at the meeting.
Q: WHY DID I RECEIVE MORE THAN ONE COPY OF THIS PROXY STATEMENT?
A: If you own our common stock in more than one account, such as individually
and also jointly with your spouse, you may receive more than one copy of
this document. To assist us in saving money and to provide you with better
shareholder service, we encourage you to have any duplicate accounts
registered in the same name and address. You may do this re-registration by
contacting our Shareholder Services Department toll-free at (800) 356-6423
if calling from within the Continental United States, and at (608) 252-4744
if calling from the Madison area.
Q: WHAT IS MGE ENERGY, INC.?
A: We are an investor-owned public utility holding company formed in August of
2002. Our headquarters are in Madison, Wisconsin, and we are the parent
company of Madison Gas and Electric Company (MGE), our wholly owned
subsidiary. Our other subsidiaries include MAGAEL, LLC; Central Wisconsin
Development Corporation; Wisconsin Resources Corporation; North Central
Technologies, Inc.; Mid America Technologies, Inc.; MGE Construct, LLC; and
MGE Power, LLC.
Q: WHAT IS THE PURPOSE OF THE MEETING?
A: The purpose of the meeting is:
- To elect three Class II directors to terms of office expiring at the 2006
Annual Meeting of Shareholders; and
- To transact such other business as may properly come before the meeting.
1
VOTING
NUMBER OF VOTES PER SHARE
Each share of common stock issued and outstanding as of the record date for
the meeting is entitled to one vote at the meeting, except as described below
for shareholders who own more than a specified percentage of the common stock.
If you are a participant in our Dividend Reinvestment and Direct Stock Purchase
Plan, the shares you have accumulated in that plan are held by the administrator
under the nominee name of Madge & Co. Those shares, including your reinvestment
shares, will be voted in accordance with the direction given on your proxy. On
April 11, 2003, we began mailing this proxy statement to all shareholders of
record at the close of business on March 14, 2003, the record date for the
meeting. On that date, there were 17,638,797 shares of our common stock issued
and outstanding.
Our Articles of Incorporation contain a provision limiting the voting power
of any shareholder who acquires more than 10 percent of our outstanding voting
stock. In addition, under the Wisconsin Business Corporation Law, the voting
power of shares held by any person in excess of 20 percent of the voting power
in the election of directors is limited to 10 percent of the full voting power
of the excess shares. To our knowledge, neither of these limitations currently
applies to any shareholder.
HOW STREET NAME HOLDERS MAY VOTE
If you own shares through a broker, the registered holder of those shares
is your broker or its nominee. If you receive our proxy materials from your
broker, you should vote your shares by following the procedures specified by
your broker. Your broker will tabulate the votes it has received from its
customers and submit a proxy card to us reflecting those votes. If you plan to
attend the annual meeting and vote in person your shares held by your broker,
you should contact your broker to obtain a broker's proxy card and our
Shareholder Services (1-800-356-6423) to make a reservation for the meeting.
HOW RECORD HOLDERS MAY VOTE
The record date for the meeting is March 14, 2003. Holders of record as of
such date can vote in person at the meeting or by proxy. By giving us your
proxy, you are authorizing the individuals named on our proxy card (the proxies)
to vote your shares in the manner you indicate.
As a convenience to you, we are providing you with the option to vote by
proxy via the Internet or via toll-free touch-tone telephone. You may still cast
your vote by returning your signed and dated proxy card. Instructions regarding
all three methods of voting are included on the proxy card. If you sign and
return the proxy card without specifying any instructions and without indicating
expressly that you are not voting some or all of your shares, your shares will
be voted for the election of all three director nominees. The signature on the
proxy card should correspond exactly with the name of the shareholder as it
appears on the proxy card. Where stock is registered in the name of two or more
persons, each of them should sign the proxy card. If you sign a proxy card as an
attorney, officer, personal representative, administrator, trustee, guardian, or
similar capacity, please indicate your full title in that capacity.
HOLDERS NEEDED TO ESTABLISH A QUORUM
A quorum is necessary to hold a valid meeting of shareholders. If
shareholders entitled to cast at least a majority of the shares entitled to vote
at the meeting are present in person or by proxy, a quorum will exist. In order
to assure the presence of a quorum, please vote via the Internet, telephone, or
sign and return your proxy card promptly in the enclosed postage-paid envelope
even if you plan to attend the meeting. Abstentions and broker nonvotes are
counted as present for establishing a quorum. A broker nonvote occurs when a
broker votes on one or more matters on the proxy card, but not on others because
the broker does not have the authority to do so.
2
THE VOTE NECESSARY FOR ACTION TO BE TAKEN
In voting for the election of directors, you may vote for the election of
all of the nominees or you may withhold your votes as to all or specific
nominees. The three persons receiving the greatest number of votes will be
elected to serve as Class II directors. Accordingly, withholding authority to
vote for a director and broker nonvotes with respect to the election of
directors will not affect the outcome of the election of directors.
REVOCATION OF PROXIES
If you are a registered holder of our common stock, you may revoke your
proxy by giving written revocation to our Corporate Secretary at any time before
your proxy is voted, by executing a later-dated proxy card that is voted at the
meeting, or by attending the meeting and voting your shares in person. If your
shares are held by a broker, you must contact your broker to revoke your proxy.
Attendance at the meeting will not automatically revoke your proxy.
ELECTRONIC ACCESS TO PROXY MATERIALS AND ANNUAL REPORT
Shareholders can elect to view future proxy statements and annual reports
over the Internet instead of receiving paper copies in the mail. If you received
a paper copy of the proxy statement and annual report and would prefer to access
these via the Internet in the future, call Shareholder Services at
1-800-356-6423 (toll-free) or complete and mail the electronic access sign-up
form enclosed with your proxy materials.
3
ELECTION OF DIRECTORS
Our Board of Directors consists of nine directors divided into three
classes, each class having three directors, with one class being elected each
year for a term of three years. All of our directors serve concurrently as
directors of Madison Gas and Electric Company.
Mr. Swanson, Dr. Nevin, and Mr. Wolter are currently Class II directors
whose terms expire at the 2003 Annual Meeting of Shareholders. They have been
nominated for reelection to serve as Class II directors for three-year terms
expiring at the 2006 Annual Meeting of Shareholders and upon the election and
qualification of their successors.
Each of the nominees has indicated a willingness to serve if elected, and
the Board has no reason to believe that any nominee will be unavailable. If any
nominee should become unable to serve, it is presently intended that your proxy
will be voted for a substitute nominee designated by the Board.
The following table sets forth information about the nominees and the
current directors who will continue in office after the meeting.
MGE**
DIRECTOR
SINCE
--------
NAMES (AGES)* AND BUSINESS EXPERIENCE
------------------------------------------------------------
NOMINEES (CLASS II) -- TERM EXPIRING IN 2006
H. LEE SWANSON (64), Cross Plains, Wisconsin................ 1988
Chairman of the Board and President, SBCP Bancorp, Inc.,
and Chairman of the Board of the State Bank of Cross
Plains, with which he has been associated for more than 37
years; also director of the Federal Home Loan Bank of
Chicago; also director and trustee of Cornell College.
JOHN R. NEVIN (60), Madison, Wisconsin...................... 1998
Executive Director, Grainger Center for Supply Chain
Management, and Grainger Wisconsin Distinguished
Professor, School of Business, University of
Wisconsin-Madison, where he has been a faculty member for
32 years.
GARY J. WOLTER (48), Madison, Wisconsin..................... 2000
Chairman of the Board of Directors, President and Chief
Executive Officer of MGEE and MGE, of which he has been an
officer since 1989 and an employee since 1984; also
director of Meriter Hospital and Meriter Health Services
and member of the Board of Trustees of the University of
Wisconsin Research Park.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
CLASS III -- TERM EXPIRING IN 2004
RICHARD E. BLANEY (66), Madison, Wisconsin.................. 1974
Retired President of Richard Blaney Seeds Inc., sellers of
hybrid seed corn, with which he was associated for more
than 10 years.
FREDERIC E. MOHS (65), Madison, Wisconsin................... 1975
Partner in the law firm of Mohs, MacDonald, Widder &
Paradise, of which he has been a member since 1968; also
Regent of the UW System, director of the UW Hospitals and
Clinics, and member of the Board of Trustees of the
University of Wisconsin Research Park.
F. CURTIS HASTINGS (57), Madison, Wisconsin................. 1999
President of J. H. Findorff & Son, Inc., and Findorff,
Inc., commercial and industrial general contractors and
design builders, with which he has been associated for 32
years; also director of National Guardian Life Insurance
Co.
CLASS I -- TERM EXPIRING IN 2005
DAVID C. MEBANE (69), Madison, Wisconsin.................... 1984
Vice Chairman of the Boards of Directors of MGEE and MGE,
of which he had been an officer since 1980; also director
of First Federal Capital Corp., a bank holding company.
4
MGE**
DIRECTOR
SINCE
--------
REGINA M. MILLNER (58), Madison, Wisconsin.................. 1996
Attorney, analyst and broker for more than 24 years; her
firm, The RMillner Company, S.C., specializes in complex
real estate projects and provides consulting services for
private clients and governmental agencies; also director
of Meriter Hospital and Meriter Health Services.
DONNA K. SOLLENBERGER (54), Middleton, Wisconsin............ 2000
President and Chief Executive Officer of UW Hospitals and
Clinics since December, 1999; Executive Vice President and
Chief Operating Officer of City of Hope National Medical
Center, Los Angeles, California, January, 1997, to
December, 1999; Vice President for Hospitals and Clinics
at M.D. Anderson Cancer Center, Houston, Texas, 1991-96.
---------------
* Ages as of February 1, 2003.
** Directors of MGE Energy, Inc., since becoming the holding company of Madison
Gas and Electric Company in August, 2002.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table lists the beneficial ownership of our common stock as
of March 1, 2003 (except as otherwise noted) of each director and nominee, the
individuals named in the summary compensation table, the directors and executive
officers as a group, and each person known by us to be the beneficial owner of
more than 5 percent of the outstanding shares of our common stock. In each case,
the indicated owner has sole voting power and sole investment power with respect
to the shares shown except as noted.
PERCENT OF
NUMBER OF SHARES OUTSTANDING
NAME BENEFICIALLY OWNED COMMON STOCK
---- ------------------ ------------
Richard E. Blaney..................................... 1,783 *
Kristine A. Euclide................................... 426 *
F. Curtis Hastings.................................... 2,017 *
Lynn K. Hobbie........................................ 2,988(1)(2) *
Mark T. Maranger...................................... 1,276 *
David C. Mebane....................................... 11,608(2) *
Regina M. Millner..................................... 933 *
Frederic E. Mohs...................................... 12,197(3) *
John R. Nevin......................................... 1,139 *
Donna K. Sollenberger................................. 1,087 *
H. Lee Swanson........................................ 5,280 *
Gary J. Wolter........................................ 8,059(1)(2) *
All directors and executive officers as a group (17
persons)............................................ 67,616(2) *
Systematic Financial Management, L.P.................. 951,054(4) 5.4%
Glenpoint East, 7th Floor
300 Frank W. Burr Blvd
Teaneck, NJ 07666
---------------
* Less than 1 percent.
(1) L. Hobbie and G. Wolter are directors of Madison Gas and Electric
Foundation, Inc., and as such have shared voting and investment power in an
additional 12,000 shares of our common stock held by the Foundation. The
Foundation was formed by, and receives contributions primarily from, MGE,
which contributions are used for charitable purposes.
(2) Includes common stock held under two employee stock ownership plans for the
account of executive officers of MGE with respect to which those persons
have sole voting but no investment power: L. Hobbie, 45 shares; D. Mebane,
6,879 shares; G. Wolter, 111 shares; and directors and executive officers as
a group, 11,681 shares.
5
(3) Includes 628 shares of common stock with respect to which Mr. Mohs is
trustee of a trust for the benefit of his children.
(4) Information contained on Schedule 13G filed with the Securities and Exchange
Commission for year ended December 31, 2002. Percent shown in table is based
on 17,574,796 outstanding shares of common stock as of December 31, 2002.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers, and persons who own more than ten percent of our
common stock to file reports of ownership and changes in ownership with the SEC.
Those persons are also required to furnish us with copies of all such reports.
Based solely on our review of the copies of the reports received by us and
written representations from certain reporting persons, we note that our
directors and executive officers (we do not have any greater than ten percent
shareholders) filed all required reports during or with respect to the year
ended December 31, 2002, on a timely basis, except for Lynn K. Hobbie who filed
one report late relating to the sale of stock.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
We have an Audit Committee, a Compensation Committee, an Executive
Committee, and a Personnel Committee.
The following table sets forth the current membership of each committee and
the number of meetings held during 2002:
AUDIT COMPENSATION EXECUTIVE PERSONNEL
NAME COMMITTEE COMMITTEE COMMITTEE COMMITTEE
---- --------- ------------ --------- ---------
Richard E. Blaney.................. X X X
F. Curtis Hastings................. X X
David C. Mebane.................... X
Regina M. Millner.................. X X
Frederic E. Mohs................... X X X X
John R. Nevin...................... X X
Donna K. Sollenberger.............. X X
H. Lee Swanson..................... X X X
Gary J. Wolter..................... X
Number of Meetings................. 2 1 0 0
The Board of Directors of MGE met 12 times during 2002. Our Board of
Directors met five times during 2002. Each director attended at least 75 percent
of the aggregate number of meetings of the Boards and the committees on which
the director served.
The function of the Audit Committee is to meet with our internal auditors
and independent public accountants and discuss with them the scope and results
of their audits, accounting practices, and the adequacy of our internal
controls. The Audit Committee also approves services performed by independent
public accountants for us. The Audit Committee consists of seven independent
directors as defined in Rule 4460(d)(2)(B) of the National Association of
Securities Dealers' listing standards.
The function of the Compensation Committee is to review the salaries, fees,
and other benefits of officers and directors and recommend compensation
adjustments to the Board.
The Executive Committee acts in lieu of the full Board and between meetings
of the Board. The Executive Committee has the powers of the Board in the
management of our business and affairs, except action with respect to dividends
to shareholders, election of principal officers, or the filling of vacancies on
the Board or committees created by the Board.
6
The Personnel Committee makes recommendations with respect to the election
of our directors and officers. Nominations for the Board by shareholders, which
are submitted to the Chief Executive Officer and/or President of the Company in
the manner described under "Other Information -- Shareholder Proposals for the
2004 Meeting," will be considered by the Personnel Committee, the Board, or the
Chief Executive Officer.
AUDIT COMMITTEE REPORT
The Audit Committee oversees our financial reporting process on behalf of
our Board. The Audit Committee consists of seven independent directors. Its
duties and responsibilities are set forth in the Audit Committee Charter adopted
by the Board. The Audit Committee Charter is included in this proxy statement as
Exhibit A.
In the course of fulfilling its responsibilities, the Audit Committee has:
- Reviewed and discussed with management the audited financial statements
for the year ended December 31, 2002;
- Discussed with the representatives of our independent accountants,
PricewaterhouseCoopers LLP (PwC), all matters required to be discussed by
Statement on Auditing Standards No. 61, Communication with Audit
Committees;
- Received the written disclosures and the letter from PwC required by
Independence Standards Board Standard No. 1, Independence Discussions
with Audit Committees;
- Discussed with PwC their independence from the company and management;
and
- Considered whether the provision by PwC of nonaudit services is
compatible with maintaining their independence.
AMOUNT
--------
INDEPENDENT ACCOUNTANT FEES DISCLOSURE
AUDIT FEES.................................................. $186,200
========
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION
FEES...................................................... $ 0
========
Financial analysis for UW Cogeneration project.............. $386,900
Business resumption plan analysis........................... $190,200
Holding company SEC registration statement filing........... $ 58,900
Review of finance SEC registration statement filing......... $ 56,000
Tax services................................................ $ 51,200
Computer security analysis.................................. $ 13,400
Review of credit policy..................................... $ 4,500
--------
ALL OTHER FEES.............................................. $761,100
========
Based on the foregoing, the Audit Committee recommended to the Board that
the audited financial statements referred to above be included in our annual
report on Form 10-K and the annual report to shareholders for the fiscal year
ended December 31, 2002.
Richard E. Blaney Frederic E. Mohs H. Lee Swanson
F. Curtis Hastings John R. Nevin
Regina M. Millner Donna K. Sollenberger
7
DIRECTOR COMPENSATION
Effective December, 2002, directors who are not employees of MGE receive an
annual retainer of $14,500, plus $1,000 for each Board meeting attended and $350
for each Audit, Compensation, Executive, or Personnel Committee meeting
attended. Mr. Wolter receives no additional compensation for serving as a
director. Also effective December, 2002, the chairperson of the Audit Committee
receives an additional $4,000 retainer.
Following Mr. Mebane's retirement as an employee of MGE effective January
31, 2003, he became eligible to receive director fees as outlined above. Under a
separate consulting agreement, Mr. Mebane receives additional compensation of
$3,000 per month for consulting services in his role as Vice Chairman beyond his
regular director responsibilities. The term of this agreement ends as of his
anticipated retirement from our Boards under our Bylaws at our Annual
Shareholder Meeting in 2004.
EXECUTIVE COMPENSATION
The following table sets forth compensation information for 2000, 2001, and
2002 for our Chief Executive Officer and our four other most highly compensated
executive officers serving as such on December 31, 2002, whose salary exceeded
$100,000 for 2002.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------- -----------------------------------
AWARDS PAYOUTS
------------------------- -------
SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING LTIP ALL OTHER
SALARY BONUS COMPENSATION STOCK OPTIONS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(4) AWARDS($)(5) (#) ($) ($)(6)
--------------------------- ---- ------- ------ ------------ ------------ ---------- ------- ------------
Gary J. Wolter (CEO) (1)...... 2002 363,858 65,000 2,624 0 0 0 16,566
Chairman, President and..... 2001 308,092 45,000 1,631 28,812 0 0 10,102
Chief Executive Officer..... 2000 251,674 29,000 0 0 0 0 10,018
David C. Mebane (2)........... 2002 287,084 0 0 0 0 0 57,567
Vice Chairman............... 2001 310,008 0 0 0 0 0 20,994
2000 311,674 29,000 0 0 0 0 23,115
Mark T. Maranger.............. 2002 184,869 35,000 0 0 0 0 5,603
Senior Vice President....... 2001 131,762 25,000 0 12,005 0 0 2,750
Kristine A. Euclide........... 2002 159,652 45,000 104 0 0 0 4,625
Vice President and.......... 2001 19,963 15,000 0 0 0 0 50
General Counsel
Lynn K. Hobbie (3)............ 2002 165,317 35,000 0 0 0 0 5,017
Senior Vice President....... 2001 156,353 30,000 0 12,005 0 0 4,731
2000 143,181 24,000 0 0 0 0 6,676
---------------
(1) Senior Vice President -- Administration and Secretary until February 1,
2000, when he was promoted to President and Chief Executive Officer.
Promoted to Chairman, President and Chief Executive Officer on February 1,
2002.
(2) Chairman, President and Chief Executive Officer until February 1, 2000.
Chairman of the Board until February 1, 2002. Retired from employment on
January 31, 2003.
(3) Vice President -- Marketing until February 1, 2000, when she was promoted to
Senior Vice President.
(4) Amounts shown are above-market interest rates credited to deferred
compensation accounts.
(5) The amounts in the table reflect the market value on the date of grant of
restricted stock awarded under restricted stock award agreements. The number
of shares of restricted stock held by Mr. Wolter is 1,200, by Mr. Maranger
is 500, and by Ms. Hobbie is 500. The market value of the restricted stock
as of December 31, 2002, is $32,124 for Mr. Wolter and $13,385 each for Mr.
Maranger and Ms. Hobbie. The restricted stock vests if the executive remains
employed until September 1, 2004. Holders of shares of
8
restricted stock are entitled to receive dividends on those shares at the
same rate and at the same time as on the common stock.
(6) Amounts shown for all other compensation for 2002 are company contributions
to a 401(k) defined contribution plan, $75 for value attributable to a
holiday gift, and pay for unused vacation. The 401(k) company contribution
for 2002 was $5,500 for Mr. Wolter and Mr. Mebane, $5,528 for Mr. Maranger,
$4,550 for Ms. Euclide, and $5,017 for Ms. Hobbie; the residual for Mr.
Wolter and Mr. Mebane in 2002 was pay for unused vacation.
REPORT ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The principal goal of the compensation program is to pay employees,
including executive officers, at levels which are:
- Reflective of how well we are achieving our corporate mission;
- Consistent with our current financial condition, earnings, rates and
total shareholder return, and the projected Consumer Price Index;
- Reflective of individual performance and experience; and
- Competitive in the marketplace.
We strive to administer our compensation program in a fair and consistent
manner.
Executive salaries are established within a range that reflects competitive
salary levels for similar positions in similar-sized gas and electric utilities,
similar-sized companies outside of the utility industry, and other Wisconsin
utilities. The utilities used for salary comparison are not the same companies
included in the performance graph peer group in this proxy statement. When
examining compensation peer groups, it was determined more appropriate to
consider similar-sized utilities, other similar-sized companies, and other
Wisconsin utilities.
The midpoint (or middle) of an executive's salary range is approximately
equal to the median salary level of the surveyed utilities. An executive's
position in the range reflects his or her performance over a period of years in
that position, the executive's experience in that position, and our performance.
Specific individual or company performance targets are not set. Instead, an
executive's salary within the salary range is determined by subjectively
evaluating the individual's performance and experience and our performance.
While our current compensation program has functional adequacy to retain
and fairly compensate executives, the Compensation Committee and the full Board
review the objectives of the executive compensation program on a continuing
basis. Each year, the Compensation Committee reviews and recommends to the Board
annual salaries, salary grades and ranges, and the overall salary program design
for executives.
From time to time the Compensation Committee considers awarding bonuses to
executives in the form of cash and/or stock. These bonuses may be made for
extraordinary company or individual performance because of a desire to retain an
executive by making that executive's compensation more competitive, to align the
long-term interests of executives with shareholders, and for other reasons.
EXECUTIVE COMPENSATION
Performance factors such as earnings, rates, shareholder return, and other
available financial criteria were used in determining the CEO's and other
executive officers' positions in his or her salary range. Other criteria such as
gas and electric reliability, customer service, and responsiveness to industry
change were also examined.
9
Officer salaries were set effective May 1, 2002. Among the significant
achievements the Compensation Committee considered in setting the salary of the
CEO and other senior executives were the following: 2001 earnings exceeded
budget despite lower gas sales due to warm weather; our gas incentive and
weather hedging programs provided additional benefit to both customers and
shareholders; Standard and Poor's rated us the highest combination gas and
electric utility in the country; Prairie du Chien gas operations were purchased
and integrated into our overall operations; MGE Energy, Inc. was formed; the
automated meter reading project began; progress was made on various projects,
including the proposed construction of a cogeneration plant and a proposal to
build coal facilities in which we have an option to participate; and community
relations were strengthened.
A cash bonus was granted to officers based on 2002 performance. When
determining whether to grant the bonus, the Compensation Committee in particular
considered the performance factors noted above.
In February of 2002, the CEO was named Chairman in addition to his other
duties. His salary was set at $357,192. In May of 2002, the CEO's annual salary
was set at $367,908. The CEO was awarded a bonus of $65,000 based on 2002
performance. The CEO's total compensation remains below the midpoint of the
market total compensation for both general industry and similar-sized utilities
in the compensation study.
Richard E. Blaney
Frederic E. Mohs
H. Lee Swanson
10
COMPANY PERFORMANCE
The following graph shows a five-year comparison of cumulative total
returns for us, Russell 2000, and the EEI Investor-Owned Electrics Index,
weighted according to each company's market capitalization as of the beginning
of each year.
MGE ENERGY, INC.
FINANCIAL PERFORMANCE
CUMULATIVE FIVE-YEAR TOTAL RETURN COMPARISON
[PERFORMANCE GRAPH]
Assumes $100 invested on Dec. 31, 1997, in each of our Common Stock, Russell
2000, and the EEI Index.
* Total return assumes reinvestment of dividends
--------------------------------------------------
RUSSELL EEI
MGEE 2000 INDEX
---------------------------------------------
1997 $100 $100 $100
1998 $105 $ 97 $114
1999 $ 99 $118 $ 93
2000 $119 $115 $137
2001 $147 $117 $125
2002 $156 $ 93 $107
11
MGE ENERGY, INC.
FINANCIAL PERFORMANCE
MGEE VERSUS WISCONSIN PEER GROUP
NOTE: This graph is for comparison purposes only. It is to show how our
Five -- Year Total Return compares to the other Investor-Owned Wisconsin
utilities.
[PERFORMANCE GRAPH]
Assumes $100 invested on December 31, 1997, in each of our Common Stock and the
Wisconsin Utility Peer Group Average. The Wisconsin Peer Group average is
weighted based on market capitalization at the beginning of the year.
* Total return assumes reinvestment of dividends
---------------------------------
WI
PEER
MGEE GROUP
------------------------------
1997 $100 $100
1998 $105 $112
1999 $ 99 $ 85
2000 $119 $110
2001 $147 $113
2002 $156 $105
Wisconsin Peer Group:
Wisconsin Energy Corp.
Alliant Energy Corp.
WPS Resources Corp.
PENSION PLAN AND SUPPLEMENTAL RETIREMENT PLAN
MGE has a noncontributory qualified defined benefit pension plan covering
its salaried employees. The amount of pension is based upon years of service and
high 60-month average earnings in the ten years prior to retirement.
The following table indicates the estimated maximum retirement benefits
payable (unreduced for survivor protection) at the normal retirement age of 65
for specified compensation and years of service classifications. All
compensation shown in the salary and bonus columns of the summary compensation
table is included in compensation under the pension plan, subject to any
statutory restrictions imposed by the
12
Internal Revenue Code. Information in this table is based on the pension plan
formula for years of service credit earned in 1986 and subsequent years. The
retirement benefits are not subject to any reduction for Social Security
benefits received by the employees or for any other offset amounts.
PENSION PLAN TABLE(1)
ANNUAL PENSION AT NORMAL RETIREMENT AGE OF 65
AFTER YEARS OF SERVICE INDICATED BELOW(2)
----------------------------------------------------
HIGH FIVE-YEAR 30 YEARS
AVERAGE ANNUAL SALARY 10 YEARS 15 YEARS 20 YEARS 25 YEARS OR MORE
--------------------- -------- -------- -------- -------- --------
$125,000..................................... $17,500 $26,250 $35,000 $43,750 $52,500
$150,000..................................... $21,000 $31,500 $42,000 $52,500 $63,000
$175,000..................................... $24,500 $36,750 $49,000 $61,250 $73,500
$200,000..................................... $28,000 $42,000 $56,000 $70,000 $84,000
---------------
(1) The retirement benefits reflect limits imposed by the Internal Revenue Code
on benefit amounts and covered compensation.
(2) The pension plan table does not reflect service credit prior to 1986 when
the pension plan required employee contributions. The normal retirement
pension for employees with service credits prior to 1986 will exceed the
amounts shown in the pension plan table, depending on their years of
pre-1986 service and contributions made to the pension plan.
The estimated annual retirement benefit payable at normal retirement age of
65 under the pension plan formula (assuming continuation of 2002 compensation
levels through retirement and taking into account employee contributions and
service credits for 1985 and prior years) is $101,725 to Mr. Wolter, $34,268 to
Mr. Maranger, $37,937 to Ms. Euclide, and $84,027 to Ms. Hobbie. At December 31,
2002, the annual retirement benefit payable to Mr. Mebane was $93,922.
The full credited years of service under the pension plan are 19 for Mr.
Wolter, two for Mr. Maranger, one for Ms. Euclide, 17 for Ms. Hobbie, and 26 for
Mr. Mebane.
Officers of MGE are covered under separate nonqualified supplemental
retirement agreements which provide a supplemental retirement benefit to the
pension plan. Under the terms of the agreements covering Mr. Wolter, Mr. Mebane,
and Ms. Hobbie, the supplemental retirement benefit is a designated percentage
ranging from 55% to 70% of the final 60-month average earnings less the benefit
payable from the pension plan. Under the terms of the agreements covering Mr.
Maranger and Ms. Euclide, the supplemental retirement benefit is a designated
percentage ranging from 20% to 40% of the final 60-month average earnings in
addition to the benefit payable from the pension plan. In all of the agreements,
the designated percentage is based on the officer's age at retirement. The
estimated supplemental annual retirement benefit payable at normal retirement
age of 65 under the supplemental retirement agreements (assuming continuation of
2002 compensation levels through retirement) for MGE's executive officers is
$198,475 to Mr. Wolter, $87,948 to Mr. Maranger, $81,861 to Ms. Euclide, and
$56,195 to Ms. Hobbie. At December 31, 2002, the annual supplemental retirement
benefit payable to Mr. Mebane was $127,088.
DEFERRED COMPENSATION PLAN
Officers of MGE are permitted to defer a portion of their current salary
under a nonqualified deferred compensation plan initiated in 1984. Three
officers contributed to the plan during 2002. Participants in the plan are
entitled to receive deferred compensation upon termination of active employment.
Deferred compensation under this plan does not constitute compensation as
defined under the pension plan described above, but is considered compensation
under the supplemental retirement agreements.
MGE has entered into a trust agreement for the purpose of assuring the
payment of its obligations under the supplemental retirement agreements and
deferred compensation plan. Under the trust agreement, in the event of a change
in control or potential change in control of MGE, MGE will be obligated to
deliver to the trustee cash or marketable securities having a value equal to the
present value of the amounts which MGE is
13
obligated to pay under the supplemental retirement agreements and the deferred
compensation plan and the costs of maintaining the trust. "Change in control" is
defined generally as the acquisition by any person, subject to certain
exceptions, of beneficial ownership of 20 percent or more of our common stock; a
change in the majority of the Board of Directors; certain mergers or similar
transactions involving MGE's assets where, among other conditions, the current
shareholders do not constitute at least 60 percent of the shareholders of the
resulting or acquiring entity; or a liquidation of MGE.
SEVERANCE PLANS
MGE has entered into individual severance agreements with certain key
employees, including Mr. Wolter, Mr. Maranger, Ms. Euclide, and Ms. Hobbie.
Under these agreements, the employee is entitled to a severance payment
following a change in control of MGE as defined above if, within 24 months after
the change in control, employment with MGE is terminated by (i) MGE, (ii) the
employee for good reason, or (iii) the employee for any reason during the 30-day
period commencing one year after the date of change in control. Each agreement
has a three-year initial term, but on the first anniversary of execution and
each anniversary thereafter, the agreement is extended for an additional year,
unless either MGE or the employee gives notice not to extend the agreement or a
change in control of MGE has occurred. Severance payments to Mr. Wolter or Ms.
Hobbie will be equal to three times the employee's annual base salary plus three
times the highest bonus paid during any of the five years preceding a change in
control. Severance payments to Mr. Maranger will be equal to one times his
annual base salary plus one times the highest bonus paid during any of the five
years preceding a change in control. Severance payments to Ms. Euclide will be
equal to two times her annual base salary plus two times the highest bonus paid
during any of the five years preceding a change in control. If the employee
receives severance benefits following a change in control, health, life, and
disability benefits are continued for up to one, two, or three years (depending
on the individual agreement), and the employee will also be grossed up for any
excise taxes the employee may incur. In circumstances not involving a change in
control of MGE, Mr. Wolter, Mr. Maranger, Ms. Euclide, and Ms. Hobbie, like
other salaried employees, are entitled under MGE's general severance plan to a
payment equal to two weeks of compensation plus the employee's weekly
compensation multiplied by the number of years of employment, not to exceed 24.
Mr. Mebane's eligibility for severance benefits ended with his retirement as of
January 31, 2003.
OTHER INFORMATION
EXPENSES OF SOLICITATION
We will bear the cost of soliciting proxies for the annual meeting. Proxies
will be solicited by mail and may be solicited personally by our directors,
officers, or employees who will not receive special compensation for such
services. We have retained Morrow & Co., Inc., to solicit proxies at a fee of
$6,000 plus expenses.
SHAREHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
Shareholder proposals intended to be presented at the 2004 Annual Meeting
of Shareholders must be received in writing at our principal executive offices,
133 South Blair Street, Post Office Box 1231, Madison, Wisconsin 53701-1231,
Attn: Secretary prior to December 6, 2003, in order to be considered for
inclusion in our proxy statement and proxy related to that meeting. Any proposal
submitted must be in compliance with Rule 14a-8 of Regulation 14A of the SEC.
Our Bylaws set forth additional requirements and procedures regarding the
submission by shareholders of matters for consideration at the 2004 Annual
Meeting of Shareholders, including a requirement that those proposals be given
to the Secretary not later than the close of business on the 75th day and not
earlier than the close of business on the 100th day prior to the first
anniversary of the preceding year's annual meeting. Accordingly, a shareholder
proposal intended to be considered at the 2004 Annual Meeting of Shareholders
must be received by the Secretary at the address set forth above after the close
of business on February 10, 2004, and on or prior to the close of business on
March 6, 2004.
14
INDEPENDENT ACCOUNTANTS
Our Board of Directors has selected PricewaterhouseCoopers LLP to audit our
consolidated financial statements for 2003. PricewaterhouseCoopers LLP, our
independent public accountant in 2002, is expected to have a representative
present at the 2003 annual meeting who may make a statement and will be
available to respond to appropriate questions.
TRANSACTION OF OTHER BUSINESS
Our Board of Directors does not intend to present any business for action
by our shareholders at the meeting except the matters referred to in this
document. If any other matters should be properly presented at the meeting, it
is the intention of the persons named in the accompanying form of proxy to vote
thereon in accordance with the recommendations of our Board of Directors.
Please complete and sign the accompanying form of proxy whether or not you
expect to be present at the meeting and promptly return it in the enclosed
postage paid envelope.
By Order of the Board of Directors,
/s/ GARY J. WOLTER
GARY J. WOLTER
Chairman of the Board,
President and Chief Executive Officer
Dated: April 11, 2003
15
EXHIBIT A
AUDIT COMMITTEE -- CHARTER
The charter identifies the purpose, authority, composition, and
responsibilities of the MGE Energy, Inc. Audit Committee of the Board of
Directors (Committee).
PURPOSE
The purpose of the Committee is to assist the Board of Directors (Board) of
MGE Energy, Inc. (Company) in fulfilling its oversight responsibilities to the
shareholders, potential shareholders, and the investment community relating to
the integrity of financial reporting and accounting practices; the system of
internal controls; the independence and performance of the internal and external
audit processes; and the Company's process for monitoring compliance with laws
and regulations and the Company's Code of Conduct.
AUTHORITY
The Committee reports to the Board and has unrestricted access and
authorization to obtain assistance from Company personnel to accomplish its
purpose. In addition, the Committee has the discretion to initiate and supervise
investigations within the scope of its duties as it may deem appropriate and to
employ whatever additional advisors and consultants it deems necessary for the
fulfillment of its duties. The Company shall provide to the Committee the
funding necessary and appropriate to discharge its duties and responsibilities
as set forth in this charter.
COMPOSITION
The Committee shall consist of three or more outside directors, as
determined by the Board. Each member shall be an independent director, defined
as a person other than an officer or employee of the Company or its subsidiaries
or any other individual having a relationship which, in the opinion of the
Company's Board, would interfere with the exercise of independent judgment in
carrying out the responsibilities of a director. Committee members may not
receive any consulting, advisory, or other fees from the Company other than in
the member's capacity as a member of the Audit Committee, the Board, or any
other Board committee. Applicable laws and regulations shall be followed in
evaluating a Committee member's independence.
All members of the Committee shall have a working familiarity with basic
finance and accounting practices and be able to read and understand balance
sheet, income and cash flow statements. At least one member of the Committee
shall have accounting or related financial management expertise.
GENERAL RESPONSIBILITIES
1. The Committee shall provide open avenues of communication with the
director -- internal audit, the independent accountants, management, and the
Board.
2. The Committee shall report committee actions to the Board and may make
appropriate recommendations.
3. The Committee shall meet at least two times each year. The Chair of the
Committee has the power to call a committee meeting whenever he or she thinks
there is a need. A Committee member should not vote on any matter in which he or
she is not independent. The Committee may ask members of management or others to
attend the meeting and is authorized to receive all pertinent information from
management.
4. The role of the Committee is oversight, except as otherwise provided in
the Charter.
5. The Committee shall establish procedures for the receipt and handling of
complaints received by the Company regarding accounting, internal accounting
controls, or auditing matters; and the confidential,
A-1
anonymous submission by employees of the Company and its affiliates of concerns
regarding questionable accounting, internal control or auditing matters.
RESPONSIBILITIES FOR ENGAGING INDEPENDENT ACCOUNTANTS AND APPOINTING THE
DIRECTOR -- INTERNAL AUDIT
1. The ultimate accountability of the independent accountants shall be to
the Board and the Committee, as representatives of the shareholders. The
Committee shall have direct responsibility to select, compensate, evaluate, and
replace the independent accountants.
2. The Committee shall approve the engagement of independent accountants.
3. The Committee shall pre-approve any audit and non-audit services and
relationships with the independent accountants. The Chair of the Committee or
other designated Committee member may represent the entire Committee for
purposes of this pre-approval. Any services approved by the Chair or other
designated Committee member shall be reported to the full Committee at the next
scheduled Committee meeting.
4. The Committee shall ensure that all partner rotation requirements are
complied with by the independent accountants.
5. The Committee shall resolve any disagreements between management and
the independent accountants regarding financial reporting.
6. The Committee shall ensure that the Company has clear hiring policies
for employees or former employees of the independent accountants.
7. The Committee shall review and have veto power over the appointment,
compensation, replacement, reassignment or dismissal of the director -- internal
audit.
8. The Committee shall assure the objectivity of the director -- internal
audit and the independence, as defined by Independence Standards Board (ISB)
Standard No. 1, of the independent accountants, including a review of management
consulting services provided by the independent accountants and the fees paid
for them.
9. The Committee shall consider, in consultation with the independent
accountants and the director -- internal audit, the audit scope and plan of the
director -- internal audit and the independent accountants. Any changes to the
audit plans shall be reviewed with the Chair of the Committee.
10. The Committee shall make sure that the director -- internal audit and
the independent accountants coordinate the internal and external audits.
RESPONSIBILITIES FOR REVIEWING INTERNAL AUDITS, THE ANNUAL EXTERNAL AUDIT AND
THE REVIEW OF QUARTERLY AND ANNUAL FINANCIAL STATEMENTS
1. The Committee shall ensure that the independent accountants are
available to the Board at least annually, and shall provide the Committee with a
timely analysis of significant financial reporting issues.
2. The Committee shall discuss with the independent accountants:
a. All critical accounting policies and practices.
b. All discussions with management regarding alternative accounting
treatments of financial information within generally accepted accounting
principles, including the impact of using the alternative treatments and
disclosures and the treatment preferred by the accounting firm.
3. The independent accountants shall provide the Committee with all
material written communications with management.
4. The Committee shall ask management, the director -- internal audit, and
the independent accountants about significant risks and exposures and shall
assess management's responses to address them.
A-2
5. The Committee shall review with the independent accountants and the
director -- internal audit the adequacy of the Company's internal controls,
including computerized information system controls and security.
6. Shortly after the annual external audit is completed by the independent
accountants, the Committee shall review the following with management and the
independent accountants:
a. The Company's annual financial statements.
b. Any major issues regarding accounting principles and financial
statement presentations, including any significant changes in the Company's
selection or application of accounting principles.
c. The independent accountants' audit of and report on the annual
financial statements.
d. The independent accountants' qualitative judgment about the
appropriateness, not just the acceptability, of accounting principles and
financial disclosures, and about the degree of aggressiveness or
conservatism of the Company's accounting principles and underlying
estimates.
e. Any serious difficulties or disputes with management encountered
during the course of the audit.
f. Anything else about the audit procedures or findings that is
required to be discussed with the Committee by Statement on Auditing
Standards (SAS) No. 61 and No. 90, as may be modified or supplemented.
7. It is the responsibility of the director -- internal audit, not the
Committee, to plan and conduct audits. The Committee shall review the following
with management and the director -- internal audit:
a. Any significant findings during the year and management's responses
to them.
b. Any difficulties the director -- internal audit encountered while
conducting audits, including any restrictions on the scope of his or her
work or access to required information.
c. The internal auditing department's budget and staffing.
d. The internal auditing department's charter.
8. It is the responsibility of management, not the Committee, to determine
that the Company's financial statements are complete and accurate and are in
accordance with generally accepted accounting principles. The Committee shall:
a. Review with management annual filings with the Securities and
Exchange Commission (SEC) and other published documents containing the
Company's annual financial statements and shall consider whether the
information in the filings is consistent with the information in the
financial statements. The Chair of the Committee may represent the entire
Committee for purposes of this review.
b. Review the interim financial reports with management and the
independent accountants prior to filing with the SEC. The Chair of the
Committee may represent the entire Committee for purposes of this review.
9. The Committee shall review and approve the Audit Committee report for
inclusion in the Company's proxy statement.
PERIODIC COMMITTEE RESPONSIBILITIES
1. The Committee shall review and, as necessary, update the Committee's
charter at least annually.
2. The Committee shall review with the director -- internal audit the
results of his or her examination of compliance with the Company's code of
conduct.
3. The Committee shall resolve corporate disclosure disputes that are
unresolved by the Company's Disclosure Committee.
A-3
4. The Committee shall review with the Company's general counsel, legal and
regulatory matters that may have a material effect on the Company's financial
statements, compliance policies, and programs.
5. The Committee shall meet with the director -- internal audit, the
independent accountants, and management in separate executive sessions to
discuss any matters that the Committee or these groups believe should be
discussed privately with the Committee.
A-4
If you plan to attend the meeting in person, please fill out the
reservation form and return it with your proxy card so that we may have an
indication of the number of shareholders planning to attend the meeting.
If you have any questions, please feel free to call our Shareholder
Services toll-free number. Call 1-800-356-6423 if you are calling from within
the Continental United States and 252-4744 if calling from the Madison area.
[MAP]
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MGE Energy, Inc. [MGE ENERGY(TM) LOGO] Control Number
Post Office Box 1231 YOUR VOTE IS IMPORTANT! For Telephone and Internet Voting:
Madison, Wisconsin 53701-1231 -------------------------------------
-------------------------------------
VOTE BY Access our web site HTTP://WWW.PROXYVOTING.COM/MGEE. You will be asked to enter the Control Number found in
INTERNET AND the box in the upper right corner of this form.
VIEW PROXY IF YOU ELECTED TO VIEW PROXY MATERIALS VIA THE INTERNET, THEY ARE AVAILABLE AT THE VOTING WEB SITE ABOVE.
MATERIALS
Call the Toll-Free Number 1-800-678-8548. (You will not be charged for this call.) You will be asked to
enter the control number found in the box in the upper right corner of this form.
VOTE BY OPTION A: To vote as the Board of Directors recommends on ALL proposals, press 1.
TELEPHONE OPTION B: If you choose to vote on each item separately, press 0. You will hear these instructions:
To vote FOR ALL nominees press 1.
To WITHHOLD FOR ALL nominees, press 9.
To WITHHOLD FOR AN INDIVIDUAL nominee, press 0 and listen to the instructions.
IF YOU VOTE BY PHONE OR INTERNET -- DO NOT MAIL THE PROXY CARD. THANK YOU FOR VOTING.
Fold and Detach Here.
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The Board of Directors recommends a vote "FOR" Item 1.
ITEM 1. ELECTION OF DIRECTORS
Nominees for terms as stated in the Proxy:
01 H. Lee Swanson
02 John R. Nevin
03 Gary J. Wolter
Indicate your vote by placing an (X) in the appropriate box.
[ ] For All [ ] Withhold [ ] For all
for all except*
*TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE
AND MARK AN (X) IN THE "FOR ALL EXCEPT" BOX. Signature(s): Date:
ITEM 2. OTHER BUSINESS
In their discretion upon such other business as may properly ----------------------------------------------- --------------------
come before the meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED AS SPECIFIED WITH RESPECT TO PROPOSAL ----------------------------------------------- --------------------
NUMBER (1). IF NO SPECIFICATION IS MADE, THE SHARES
WILL BE VOTED "FOR ALL." Please sign exactly as name(s) appears above and date this proxy.
If joint account, each should sign. Executors, Administrators,
Trustees, etc., indicate the capacity in which you are signing.
This proxy revokes any previous proxies given. (continued on reverse side)
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2003 ANNUAL SHAREHOLDER MEETING RESERVATION
If you plan to attend the Annual Meeting, please
sign and return with your proxy vote. (IF YOU DO NOT
PLAN TO ATTEND, DO NOT RETURN THIS PORTION OF THE
FORM.)
[ ] I/we will attend the annual meeting.
----------------------------------------------------
Shareholder Attending
----------------------------------------------------
Shareholder Attending
----------------------------------------------------
Guest
[MAP]
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[MGE ENERGY(TM) LOGO] PROXY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS -- MAY 20, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I/we appoint Richard E. Blaney, Frederic E. Mohs, and David C. Mebane, as
proxies with power of substitution, to represent and to vote all shares of
stock I/we would be entitled to vote at the Annual Meeting to be held at the
Marriott-Madison West, 1313 John Q. Hammons Drive, Greenway Center, Middleton,
Wisconsin, on Tuesday, May 20, 2003 at 11 a.m., local time, and at all
adjournments thereof.
Shares represented by all properly executed proxies will be voted in accordance
with instructions appearing on the proxy. IN THE ABSENCE OF SPECIFIC
INSTRUCTIONS, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY
OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
PLEASE SIGN EXACTLY AS NAME(S) APPEARS ON THIS PROXY CARD AND DATE THIS PROXY.
IF JOINT ACCOUNT, EACH JOINT OWNER SHOULD SIGN. EXECUTORS, ADMINISTRATORS,
TRUSTEE, ETC., INDICATE THE CAPACITY IN WHICH YOU ARE SIGNING.
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